Suppose the people formed the federal government via the states as their respective agents for that limited purpose and for that limited duration in time. Why not? What circumstances existed that unequivocally rule this theory out?

The compact theory has some short-comings, as do all theories. One is this: If the states consent to an Unconstitutional act, where does this leave the people? I do not see any situation that requires the people to be wholly dependent on their states to challenge the federal government. I think the people are entitled to do so directly. Thus, the states can be thought of as the agents of the people for the limited purpose of ratifying the constitution. After ratification, we have 3 participants in the structure: the fed, the state and the person. I think each exists in its own right. I think each has its own claim with respect to its sphere of authority and the right to resist overreaching from the other. In fact, we know this to be true. States challenge the feds, the feds challenge states, people challenge the states, people challenge the feds, etc. Clearly, it doesn’t end with the states, and rightly so. To place the state as the sole arbiter for the people is reckless, and it abandons the notion of government as servant.

It so happens that sometimes the states might serve the interests of the people, and sometimes they might not. It’s really not much different than the feds operate. So, the short answer to the “compact vs. nationalist” debate is…. These ought not to be the only choices, because each is flawed. The focus on rights should always, in the end, rest in the people.